Latin America’s E-commerce Market Booms, Powered by New Instant-Payments Rails

Brazil’s Pix instant-payments system, launched only last year by the country’s Central Bank, has experienced exponential growth that’s outpaced credit and debit cards and even Brazil’s own boletos, per the third edition of the annual Beyond Borders 2021-2022 research study funded by fintech unicorn EBANX. 

From non-existence in early 2020 to online shopping’s primetime season in 2021, more than half of Brazil’s population of 214 million people uses Pix today. It’s sped from zero, straight up and to the right since Q4-2020, and shows no signs of slowing down. 

“The rise of real-time payments such as Pix and e-wallets is transforming Latin Americans’ relationship with digital commerce and creating a race in terms of delivering better shopping experiences, expanded payments options, and even impacting logistics’ prowess and financial innovation,” said João Del Valle, co-founder and CEO at EBANX.

LatAm: a vital battleground for global and local players

EBANX’s new Beyond Borders study, launched today, finds Latin America to be one of the fastest-growing e-commerce markets in the world. The region is expected to expand at 31 percent per year through 2025. 

Central America, especially, will have some of the highest growth rates in the region in 2021: with an online market still in its infancy, and a young and digital-savvy population that is eager to buy online, the region should be the next sweet spot in LatAm. Countries such as El Salvador, Guatemala, and Panama are expected to lead the way in 2021, with growth rates of 50, 60 and 40 percent, respectively.

Data chart courtesy of Beyond Borders 2021-2022 study

Because of this hyper-growth scenario, Latin America has become a battleground for global and local players, with growing competition in both retail and digital products and services. 

The booming region will be the key to sustained growth for global companies, while more mature markets such as the United States and Europe reach a saturation point. LatAm’s streaming market, for instance, is the second-fastest growing worldwide, according to estimates from the global data and insights firm Netscribes, with fierce competition between local and global players.

LatAm fintechs are laying down new global commerce rails

“For global merchants expanding to the region – from Alibaba to Amazon and Shopee in e-commerce, to tech giants offering a variety of services such as Garena, Netflix or WhatsApp – Latin America’s payments landscape is particularly daunting. In South America alone, there are at least 14 different currencies,” wrote EBANX’s Del Valle in a recent TechCrunch+ guest post.  

For global tech titans, smaller SMBs and businesses of all kinds that are riding a wave of digital acceleration since the pandemic began last year, a new breed of infrastructure fintechs have attracted unprecedented venture funding this year to make online commerce and payments faster, easier and more efficient, according to Del Valle. When it comes to digital commerce, the world is smaller than ever, and our shopping and payment experiences need to reflect this new reality. 

The Beyond Borders 2021-2022 study shows an intriguing scenario for digital commerce in Latin America, where players who invest in localization and the right payments strategy, whether they are local or global, national or international, have a better chance to seize the region’s full potential.